followthemedia.com - a knowledge base for media professionals
Big Business

Score One For The Politicians

That politicians seek to control media is the single, universal truth in the relationship between politicians and media. The most authoritarian politicians demand absolute authority over media. More often than not the politicians win. There are no exceptions.

egg on faceFor more than a year the media and business empire of Aydin Dogan has tangled with the Turkish government under Prime Minister Recep Tayyip Erdogan. Dogan is a billionaire with wide ranging business interests including, arguably, more than half of Turkey’s private sector broadcast and print outlets. He has promoted, quite visibly, Turkey’s relationship with the wider world. This has brought him into conflict with PM Erdogan.  

When Turkey’s tax authority ruled that Dogan Yayin Holdings (DYH), the media holding company of Dogan Holdings, owed billions in back taxes and penalties, Aydin Dogan seemed to be working through officialdom for a financial solution. The total tax and penalty would, literally, absorb the company.

There are two related tax problems. One relates to the sale by Dogan Yayin Holdings (DYH) of 25% of Dogan TV to German media company Axel Springer. Tax authorities say DYH owes TRY 914.82 million (about €415 million) for back tax on the transaction and penalties. Then there is another tax penalty of TRY 4.8 billion (about €2.15 billion). (See details here) PM Erdogan has been less than pleased with the Axel Springer deal, particularly in light of a spectacular corruption investigation by Dogan owned newspaper Hürriyet, embarrassing to PM Erdogan’s political party.

Dogan’s business strategy has been to use foreign investment as an insurance policy against the tendency of politicians to impose their will on media outlets. Floating the various media company’s shares – minorities, but significant minorities – on the Istanbul Stock Exchange has been one insurance policy. Joint venturing with high profile foreign media investors has been another.

The Ministry of Finance and DYH failed at the end of November to reach a compromise on the total tax liabilities. Almost immediately, Axel Springer “postponed” a deal to purchase 29% of DYH. Rumors of other media asset sales set media watchers in Turkey and elsewhere wagging.

Dogan’s strategy seems to have changed from negotiating a settlement, increasingly impossible, to protecting his non-media assets. Since last week (December 11), the DYH share price in the Istanbul Stock Exchange has taken a beating, losing more than 5%. Turkey’s Ministry of Finance appeared to quash any outright asset sale by Dogan, imposing a tax lien against company shares not traded publicly.

In the opaque mix of Turkish business and politics, any buyer for Dogan assets would need advance approval from the government. Koza-Ipek Medya Grubu CEO Ali Ipek said (December 2) a deal to buy Star TV, Milliyet and Vatan was in discussion with Aydin Dogan. Word that a deal had been reached on Star TV – and perhaps more – leaked last week (December 10). In a television interview (December 13) Dogan Yayin chairman Aydin Dogan said he’d “like to shrink” the company but “there’s been no handshake.”

Dogan Yayin is the media holding company of the diversified conglomerate Dogan Holdings. Dogan TV (DTVH) is part of DYH. “If you look at Western scale, the group is not too big,” said Dogan in the television interview. “In Turkey, the size breeds envy.”

It’s far from clear how divesting Star TV affects the Axel Springer shareholding in DTVH or the CNN Time Warner shareholding in CNN Turk.

Koza-Ipek derives from the typically Turkish combination of a printing house and a mining company. In May 2008 it acquired television channel Kanaltürk. Principal owner Ali Ipek is considered politically ‘friendly’ with PM Erdogan.

By the end of Monday (December 14), media in Turkey began reporting the handshake had, indeed, taken place. Accountants were working out details, one being which executives would stay with Dogan. But any asset sale by Dogan was further complicated by tax authorities’ rejecting an appeal of the lien imposed against TRY 2 billion (about €900 million) in assets. In a statement to the Istanbul Stock Exchange, Dogan Holdings said it would appeal the decision in the courts.

In a further statement to the Istanbul Stock Exchange (December 15), Dogan Holdings confirmed a “sale or sale to be completed” of Star TV, and newspapers Milliyet and Vatan. There were no other details. Indeed, the statement, published in Borsa Diyalog, said further disclosures “will be made very public” and “rumors with respect to matters” do not originate with the company.

Those rumors have been wild or, perhaps, not. One suggested Time Warner, a joint venture partner in CNN Turk, might buy the part of the DYH assets. Another suggested that Dogan Holdings has sold or is prepared to sell all DYH assets, including newspaper Hürriyet.

Turkey’s private sector media has long provided voice to the political establishment and its opposition. Aydin Dogan, who grew rich from businesses outside the media sector, has contributed to this process, supporting some politicians, opposing others. Dogan Media’s television stations and newspapers have provided critical editorial coverage when others have supported the current political establishment.

None of this contributes in a positive way to the ambition, stronger in some Turkish quarters than others, for European Union membership. Reluctance to adopt standard assumptions of speech and press freedom, or the appearance thereof, waves a red flag in the faces of the European Commission and more than a few European leaders.

“Regarding Turkey,” said out-going EU Expansion commissioner Olli Rehn to La Libre (December 8), “we cannot open any chapter in the pre-accession negotiations before making sure that the laws addressing freedom of speech have been completely reformed. The quality is much more important than speed.”

For both Aydin Dogan and PM Erdogan there is the appearance of a simple calculus. Winning is an all or nothing race.


See also in ftm Knowledge

Media in Turkey

With roots in the East and branches in the West, media in Turkey is big, bold and sometimes government controlled. This ftm Knowledge file shows the size and the shape of this rich media market. 30 pages PDF includes Resources (December 2009)

Order here


related ftm articles:

Turkey Steps Backward
That all politicians seek to control all media is an undeniable reality. Imperious politicians seek that control imperiously. Progress in press freedom remains illusive.

Billionaire media owner, Prime Minister clash, blackmail charged
Politicians and media owners endure each other, often uneasily. Occasional snipping, back and forth, is healthy. Pushed to frenzy, these clashes never end well.

Hyperbole is to Turkey what silk is to thread
A few weeks ago the Turkish government put its second largest media company up for bid. All the great and grand were to descend with carts of cash. When the application deadline closed the Citation X’s of Rupert Murdoch, Ron Lauder, Guillaume de Posch and Minos Kyriakou had not touched down. That US$1.1 billion minimum bid, in these gossamer times, shouldn’t raise eyeshades back in the accountants’ quarry.


advertisement

ftm Resources

ftm Knowledge

Media in Spain - Diverse and Challenged – new

Media in Spain is steeped in tradition. yet challenged by diversity. Publishers hold great influence, broadcasters competing. New media has been slow to rise and business models for all are under stress. Rich in language and culture, Spain's media is reaching into the future and finding more than expected. 123 pages, PDF. January 2018

Order here

The Campaign Is On - Elections and Media

Elections campaigns are big media events. Candidates and issues are presented, analyzed and criticized in broadcast and print. Media is now more of a participant in elections than ever. This ftm Knowledge file reports on news coverage, advertising, endorsements and their effect on democracy at work. 84 pages. PDF (September 2017)

Order here

Fake News, Hate Speech and Propaganda

The institutional threat of fake news, hate speech and propaganda is testing the mettle of those who toil in news media. Those three related evils are not new, by any means, but taken together have put the truth and those reporting it on the back foot. Words matter. This ftm Knowledge file explores that light. 48 pages, PDF (March 2017)

Order here

More ftm Knowledge files here

Become an ftm Individual or Corporate Member to order Knowledge Files at no charge. JOIN HERE!

copyright ©2004-2010 ftm partners, unless otherwise noted Contact UsSponsor ftm